Industry captains want local currency

THE Confederation of Zimbabwe Industries (CZI) has implored the Government to urgently consider introducing a local currency as part of broader initiatives to improve liquidity in the economy.

Zimbabwe has been suffering liquidity shortages after adopting a multicurrency system in February 2009.

The country abandoned the Zimbabwean dollar at the height of inflation in favour of a multiple currency system, which is dominated by the United States dollar as the main medium of exchange.

Since April this year, the country has been hit by cash crisis, which the Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya has among others attributed to the foreign exchange malpractices such as externalisation.

In its manufacturing sector survey report released on Wednesday, CZI revealed that RBZ should also consider introducing a local currency to ensure cash circulation.

The industrial representative body also recommended the use of plastic money, which is already being implemented.

The central bank has been on a crusade urging the transacting public to use plastic money and electronic payment systems to ease cash shortages.

Industry captains also suggested promotion of foreign direct investment and deposits, proper management of banking system, creation of confidence in the economy as well as adopting the South African rand.

It indicated that capacity constraints impacting on industrial productivity included low demand for domestic products, liquidity crisis, competition from imports, drawbacks from current economic environment, high cost of doing business, and shortage of raw materials.

“Seventy-eight percent face competition from both local companies and foreign companies, 20 percent from domestic firms only and two percent do not face any competition,” said CZI in the report.

The report shows that capacity utilisation in the manufacturing sector has improved by 13.1 percent to 47,4 percent from 34,3 percent achieved last year.

Following the liberalisation of the economy in February 2009, the Government and the private sector continue to work on efforts to stimulate productivity to competitive levels.